Coming after the hyperlocal delivery model did not work for many companies, with many online grocery firms shutting shop in the past few months, the service launched by the Paytm-backed firm has been restricted to delivering only vegetables and fruits through the company’s network of autorickshaws.Surabhi Agarwal | ET Bureau | May 17, 2016, 08:37 IST

Coming after the hyperlocal delivery model did not work for many companies, with many online grocery firms shutting shop in the past few months, the service launched by the Paytm-backed firm has been restricted to delivering only vegetables and fruits through the company’s network of autorickshaws.

The service has started in Chandigarh and will be expanded to other cities, beginning with Gurgaon in the next one month.

Jugnoo’s founder Samar Singla said, “The idea is to have a complete end-toend integration. We will buy from the mandis in the morning and store in our warehouses. The products will then be delivered by autorickshaw drivers who are not taking a ride or are sitting idle,” Singla said.

Fatafat is already clocking 100 deliveries a day and the model seems “unit-economics positive,” he said. ​

Jugnoo first started the Fatafat service in March last year and continued it for about eight months.

The service was then used to deliver orders for products such as grocery to buyers at their homes from stores within the city.

About 2 lakh users were registered with Fatafat at the time and the company was receiving more than 1,000 orders a day across four cities.

Singla said that the service was withdrawn for multiple reasons. While Jugnoo’s network of autorickshaws was not that big earlier, there was a lot of competition from other grocery delivery apps which were giving huge discounts. “Also, we realised that not everything in hyperlocal delivery is profitable.

Products under the FMCG have very low margins and are available everywhere; making profit out of them is impossible,” he said.

Singla said that the company realised that there is a huge market for fresh fruits and vegetables and there is a decent margin on them.

According to Jugnoo, which started operations in 2014, its autorickshaw aggregation business has expanded to 10,000 autorickshaws registered on its network in over 20 cities .